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Estimating Present Bias and Sophistication over Effort and Money

Author

Listed:
  • Claudia Cerrone
  • Anujit Chakraborty
  • Hyok Jung Kim
  • Leonhard Lades

    (Department of Economics, University of California Davis)

Abstract

We use a real-effort experiment to jointly estimate present bias (β) and sophistication (̂ β) parameters, separately over money (βm, ̂ βm) and effort (βe, ̂ βe). Our novel incentive structure aligns the choice scenario with the canonical assumption of choices being the interior optima of a concave utility-maximization exercise. Participants choose to (and predict to) complete 14% (and 10%) fewer tasks on the same day than on a future day, leading to an estimated βe between 0.70 and .79 (and ̂ βe between 0.80 and .88). We find no evidence of present bias or sophistication over money

Suggested Citation

  • Claudia Cerrone & Anujit Chakraborty & Hyok Jung Kim & Leonhard Lades, 2023. "Estimating Present Bias and Sophistication over Effort and Money," Working Papers 359, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:359
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    File URL: https://repec.dss.ucdavis.edu/files/mqi34eluxel9pvwsfpcmier4etpi/Nov11_2023.pdf
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    References listed on IDEAS

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    Keywords

    present bias; sophistication; beliefs; experiment; real effort task; experiment;
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